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The upcoming fuel-efficiency regulations in India have sparked a strong and public debate among the country’s top automakers. A proposed tweak in the Corporate Average Fuel Efficiency (CAFE) norms, intended to offer concessions for certain small petrol cars, has prompted Tata Motors, Hyundai, Mahindra & Mahindra, and JSW MG Motor to raise red flags. In letters sent to government ministries, these automakers have requested policymakers to reconsider the proposal, as its implementation would unfairly benefit one manufacturer.

 

Although none of the automakers named the potential beneficiary, industry experts believe that the hint is directly toward Maruti Suzuki, the nation’s largest seller of compact cars, as the company most likely to gain from the concession.

 

 

India is preparing to implement stricter CAFE norms, reducing the permissible fleet-average CO₂ emissions from the earlier target of 113 g/km to 91.7 g/km. The automakers had expected the government to apply these norms uniformly and shift the industry toward cleaner technologies and wider adoption of electric vehicles.  However, the government’s latest draft proposes a relaxation for a specific set of small petrol cars that:

 

According to policymakers, such vehicles have “limited potential for efficiency improvements,” making them suitable for concessions. But this reason failed to convince rival manufacturers. According to executives of three major companies, the 909-kg cut-off appears arbitrary and inconsistent with global regulatory standards. They also highlighted that nearly 16% of Maruti Suzuki’s sales fall under this lightweight category, making it the primary beneficiary.

 

The concern among automakers is that a selective concession could distort competition and slow progress toward cleaner mobility.

 

In its letter to the power ministry, Mahindra strongly opposed the creation of “special categories” based on weight or size. The company warned that such a move could affect India’s shift toward safer and cleaner vehicles while disrupting the level playing field for all automakers.

 

The automaker warned that such an exemption would be considered a regressive step by international automakers, especially at a time when global markets are tightening their efficiency and emission regulations. Hyundai added that frequent policy shifts could destabilise industry planning, affecting future investments and technology upgrades.

 

JSW MG Motor pointed out that more than 95% of vehicles falling under the 909-kg weight limit come from a single manufacturer. According to the company sources, benefitting one segment could have a long-term impact on competition and market fairness.

 

In response, Maruti Suzuki argued that small cars inherently consume less fuel and emit less CO₂ than larger vehicles. Therefore, safeguarding this segment aligns with India’s emission-reduction goals. The company noted that while 16% of its sales fall under the qualifying weight band, demand for entry-level models is already declining as buyers gravitate toward larger SUVs. According to Maruti, offering concessions to small cars could help maintain affordability for budget-conscious buyers while continuing to support CO₂ reduction and fuel efficiency.

 

The policy standoff has delayed the official rollout of the revised CAFE norms. These rules are critical—they will guide automakers’ future investments, vehicle development strategies, and push toward electrification. Until a consensus is reached, manufacturers remain uncertain about how aggressively they must pursue low-emission technologies and adjust their product portfolios.

 

The final decision will not only influence India’s automotive landscape but will also shape the pace of its transition toward cleaner mobility.